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13 November, 22:03

In Q1 2018, CNA Companies reports the following transactions: Capital expenditures of $15 million Loss on sale of equipment of $6 million Debt principal repayment of $8 million Preferred dividend of $2 million Common dividend of $3 million Share buyback of $4 million Ignoring the effect of taxes, what is the impact of these transactions on retained earnings

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  1. 13 November, 22:28
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    -$11 million

    Explanation:

    According to the scenario, computation of the given data are as follow:-

    We can calculate the impact of transactions on retained earnings by using following formula:-

    Impact of transactions on retained earnings = - common dividend - preferred dividend - loss on sale of equipment

    = - $3 million - $2 million - $6 million

    = - $11 million

    All three items should be deducted as it has a negative impact on the retained earnings
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